Oil Price Hits Lowest Since Early March Despite Hormuz Reopening Doubts

According to a single-source report from The Guardian, the price of Brent crude oil has fallen to its lowest level since early March, dropping almost 2.5% to just over $81 a barrel on Tuesday, adding to a 4.75% decline on Monday. The drop comes despite uncertainty over how quickly the Strait of Hormuz will reopen after Donald Trump stated the waterway will reopen once the US and Iran sign an initial memorandum of understanding. Economists are warning that traffic through the strait will take time to return to normal, as some production facilities need to be reopened or repaired and some tankers are in the wrong places. The head of Mitsui OSK Lines, the world’s biggest tanker operator, told the Financial Times that shipowners will not resume transit for weeks until they are confident the US-Iran deal is “material.” At the G7 summit, European allies do not appear to share Trump’s optimism that the strait will reopen by Friday, with one G7 official citing serious difficulties in finding a common position. A senior US official said traffic would ramp up over time, potentially taking up to two weeks for shipping to significantly increase and longer to return to pre-conflict levels. The article also reports that the Bank of Japan raised its key interest rate to 1% from 0.75%, a 31-year high, and that Thames Water is moving closer to nationalisation after government ministers formally objected to a £10bn rescue deal proposed by its creditors.

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Sources: The Guardian